In 2016 Bulgaria’s economy finally managed to overcome the consequences of the economic crisis. Aggregate production (in real terms) surpassed its pre-crisis level. However, in most Bulgarian districts and regions recovery from the crisis is yet to come.
In 19 districts the real GDP (that is, adjusted for price fluctuations) has not reached its pre-crisis (2008) levels yet. These districts are located all over the country’s territory, in all its regions. The only region where all districts without exception have not yet recovered from the crisis is that of Northwestern Bulgaria. It includes the districts of Vidin, Vratsa, Montana, Pleven, and Lovech.
The North-central and Northeastern regions are also in the process of recovery, but close to their pre-crisis levels of production. The districts whose economies have already recovered from the consequences of the crisis are those of Veliko Tarnovo and Razgrad in the North Central region, and Varna and Dobrich in the Northeastern region, respectively. In the south, the South Central region was still “in deep water” in 2014.
Figure 1: Real GDP in Bulgarian districts in 2014 (2010 constant prices)
Source: NSI, IME calculations
In that part of the country, however, the district of Plovdiv makes an exception. Thanks to considerable investment during the last few years the real gross production in the district of Plovdiv is already higher than it was in 2008 by 8.5 %.
The Southwestern and Southeastern regions have also started to show real production which exceeds its pre-crisis levels by 2 to 3%. The economies that form the positive trends in the two regions are those of Sofia (capital city) and the greater Sofia district in the Southwestern region as well as those of Stara Zagora and Yambol in the southwest.
Economic recovery became more and more visible in 2015, judging by processes on the labor markets and income dynamics. That year was particularly buoyant for labor markets in most regions, hence, for salaries and household incomes too.
Still, 8 districts failed to join in the process of job creation and employment rates fell there in 2015. Among them are some whose local economies have very serious problems, such as Vratsa, Montana and Silistra, where employment has been stagnating and even going down in the last few years. In those districts processes of recovery have either not started at all or have been insignificant. Employment remains exceptionally low in Silistra, with less than half the population of working age in employment. The district of Sofia is also among the stagnating labor markets, while the districts of Dobrich and Kardzhali report a drop in employment rate after a rise in previous years.
In 2015 unemployment fell in all districts without exception. However, a more careful consideration of the figures shows that dropping unemployment figures are not always good news. In a number of districts this is due not to the creation of new jobs but rather to the fact that some of the unemployed have joined the group of the economically inactive, among other reasons because of becoming discouraged about finding a job. The worst example of this kind is the district of Montana, where unemployment fell to half its size but for the sole reason that economic activity went into a slump. More examples of this kind include the districts of Blagoevgrad, Plovdiv, Sofia, and Kardzhali.
Figure 2: Average annual employment rate of the population aged 15 to 64 in 2015 (%)
The stable recovery of labor markets in most districts, combined with the continuing rise of the minimum salary and the minimum insurance thresholds has led to a steady rise in salaries in all districts. The country average rise is about 6%, but it went over 10% in some districts (like Razgrad, for example) in 2014. Still, the level of remuneration in the district with the highest salaries (the capital) remained about twice as high as the one in the district with the lowest ones (Vidin).
Though salaries have grown steadily everywhere, household income dynamics vary. In some districts incomes have stagnated or fallen in 2015 - due both to the limited employment and low intensity of households’ economic activity, and to the falling incomes from other sources. In 2015 Kardzhali replaced Silistra as the district with the lowest income per person in a household (3,393 BGN).
Low income is inevitably connected with high poverty. Kardzhali is the district with the highest percentage of people living below the national poverty line – 60.1% or almost three times the national level. The other district with a very high share of poor people – over 50% – is Pazardzhik, which has traditionally been characterized by high poverty and a considerable number of people living in material deprivation.
In most cases, poverty, low income, and low employment rates are a natural consequence of insufficient investment in the respective districts – be it investment in fixed tangible assets (FTA) or foreign direct investment (FDI). After the crisis of 2009 FDI inflows decreased and in several districts even some outflow has been observed. In 2014 the district of Burgas registered a huge outflow of foreign capital (1.5 billion euro), but the cause was purely technical: accounting operations between Lukoil Neftohim and its mother company in the Netherlands. Two of the few districts to attract considerable foreign capital in 2014 were Varna and Stara Zagora.
Figure 3: Cumulative foreign direct investment in non-financial enterprises as of 31.12.2014 (Euro per capita)
However, if we look at the other key indicator of investment, expenditure on the acquisition of FTA, the picture is much more optimistic at the district level. Pre-crisis figures have already been approached in most districts, and even surpassed in 1/3 of them in 2014. Burgas and Pazardzhik stand out among the good examples as well as some of the less developed districts, such as Razgrad, Silistra, Targovishte, Pleven etc.
EU funds have been among the key factors in the growth of expenditure on the acquisition of FTA in recent years. The rate of utilization of these funds went up in 2014 and particularly in 2015, when beneficiaries had their last chance to absorb funds from the previous program period. Relative to their population, the districts with the highest rate of utilization of EU funds by municipal administrations are the districts of Gabrovo and Burgas, followed by those of Lovech and Vidin.
A considerable part of EU funds have been invested in the development of road infrastructure, though this has had no serious impact on the indicators of its development yet. A possible explanation for this paradox maybe the fact that while new roads have been built, the rehabilitation of existing ones has lagged behind. As a result, the share of roads in good condition has remained unchanged in the last four years (about 40–41%). Road quality is worst in the district of Vratsa with only 15% in good condition, while it has stayed best for another successive year in Sliven with over 70% in good condition.
A more visible improvement in infrastructure has been noted in internet access and internet use among the population. These indicators have had a stable upward trend in the last few years and by now about 60% of the population in the country has access to the net and uses it on a regular basis. In Sofia over 3/4 of the population is connected to the internet but in some less developed districts such as Vratsa and Targovishte this share remains considerably lower – about 1/3.
Local taxes and fees show an upward trend, the most significant rise in 2016 being that in the real estate tax and the waste management fee, as well as that in the license tax for retailers. The property transfer tax has also been rising on a country average basis. Generally speaking, economically more developed territories have maintained higher levels of local taxes and fees (the capital is one such example) and vice versa – these levels are lower in less developed districts. Still, there are exceptions to this unwritten rule. For example, in the district of Haskovo, one of the relatively less developed districts economically, the level of local taxes and fees has stayed high.
Figure 4: Number of changes in levels of local taxes and fees over time
Source: IME based on statements of municipalities required by the Law for Access to Public Information
On the whole, however, it is hard to discern a clear connection between decisions to do business or to live in a certain territory, on one hand, and the levels of local taxes and fees, on the other. This allows local authorities to set rates for local taxes and fees arbitrarily or based on conjuncture, rather than strategically, that is, as a part of a comprehensive local fiscal policy.
Cadastral map coverage, exceptionally important for large scale investment projects, remains rather limited in the country as a whole. Barely 1/5 of its territory has been covered by cadastral maps and the indicator has stayed frozen in recent years in most districts. It was only in Burgas, Varna, Vidin, Veliko Tarnovo, Lovech, and Shumen that the coverage did increase more considerably in 2015. The development of one-stop shop services and electronic services in municipalities has been progressing slowly and in quite a few districts it has stagnated or even gone into a skid. What is even more alarming is that the transparency of local authorities has declined in almost all districts in 2016.
Negative demographic tendencies in the country continued in 2015. Natural population growth worsened in a second successive year, reaching –6.2‰. Since 2010 there is no district in the country where the number of newborn children exceeds that of deceased people, even in Sofia this rate reached its least favorable value since 2007 (–1.7‰). As a result of falling birth rates and the continuing emigration, the age structure of the population has continued to worsen – in 2015 there were 4 districts with twice as many people aged 65+ as those aged 0 to 14: Vidin, Gabrovo, Kyustendil, and Pernik.
Though in 2015 the most intensive migration went along the “country – city” axis (37.6% of all re-settlers), higher birth rates and lower death rates in towns imply that urbanization is still strong as a trend. In 2015 73.1% of the country’s population lived in cities, with Kardzhali remaining the least urbanized district (41.1%).
Figure 5: Net migration rate, 2015 (‰)
Five districts reported a positive rate of net migration in 2015: Burgas, Varna, Sofia (capital city), greater Sofia district, and Haskovo. Sofia district registered a record high net migration rate of 5.5‰, the highest value in the entire country. The greater part of the new settlers came from the capital, their number exceeding 3,000 in 2015. The districts most negatively affected by migration were Smolyan, Razgrad, Vidin, and Vratsa, which means that the greatest number of people moved out of them.
Most of the indicators for the state of the educational system reveal a decline in the school years 2014/2015 and 2015/2016. The net enrolment rate of the population in 5th–8th grade fell to 78.3%, while the relative share of dropouts from primary and secondary education rose to 2.8%, its highest value since 2006.
Figure 6: Average grades at state matriculation exams in Bulgarian language and literature in 2016
Source: Ministry of Education and Science
After control tightened on the administration of annual state matriculation exams in Bulgarian language and literature, the national average grade of high-school graduates in the country fell to “good” 4.17 in 2016, its lowest value since the introduction of standardized external evaluation at the exit of secondary education in 2008. Parallel to it, failure percentages rose to reach 8.7%. Compared to 2014, the share of school leavers with grades below “average” 3.00 in 2016 rose from 3.0 to 16.9% in Kardzhali, from 5.0 to 16.0% in the district of Sofia, and from 3.6 to 13.9% in Silistra. This dramatic decline of high-school graduates’ performance questions both the quality of secondary education and the validity of the good results achieved in previous years. Still, there were quite a few examples of districts which retained their good performance. In 2016 the number of high-school students who failed the exam amounted to only 2.1% in the capital, 3.8% in Dobrich, and the average grades in those districts were above the national average. On the other hand, judging by the performance at matriculation exams, differences in education quality between districts deepened. The difference between the district with the lowest share of matriculation exam failures and that with the highest one went on increasing to reach 14.8 pp in 2016 from only 6.9 in 2008.
In the 2015/2016 academic year the number of university students in the country declined for a sixth successive year to reach 260,000 – the lowest number since 2006. The districts where student numbers fell most dramatically were the capital (by 3,192 students), Veliko Tarnovo (by 3,021 students) and Plovdiv (by 1,794 students).
In 2015 the ratio of general practitioners in the country to the population went on deteriorating to a record 1,619 people per one GP. Razgrad, Kardzhali, Targovishte, Ruse, and Silistra had the worst ratios which indicates a certain territorial imbalance in access to GPs. Among possible explanations for this is the low percentage of urban population. With the exception of Ruse district, where 77% of the population lives in towns, the other four districts are characterized by the lowest urbanization rates in the entire country, only Targovishte has over 50%. The number of medical specialists, however, is gradually increasing. This is typical mostly of the southern part of the country (mainly the capital, Plovdiv, and Burgas) while Pleven and Ruse are the only cities in Northern Bulgaria that show positive tendencies in this respect.
In 2015, 88.5% of the population had health insurance, the highest percentage so far since 2009. In addition to the growing employment rates, the tendency towards a growing number of insured persons also reflects the ageing of the population in some parts of the country as retired people are insured at the expense of the state budget. In districts with a significantly deteriorated age structure, such as Vidin, Vratsa, Kyustendil, and Lovech, the share of health-insured people is over 90%, while in the capital this percentage is 87%, in Burgas and Varna it is about 85%.
Another positive tendency is the continuing decline of infant mortality in the country. In 2015 it fell to 6.6‰, the lowest value for the last 12 years. There are still districts (like Lovech, Pazardzhik, and Sliven) where infant mortality is a serious issue. This indicates poor health awareness among parts of the population, mostly among ethnic minorities.
Relative to the population number, reported crimes against the person and property fell in 2015 to 13.6 per one thousand people – the lowest value since 2000. Except for a temporary rise in crime rates in the first years of the crisis (2009 and 2010), the downward tendency that started at the beginning of this century seems stable. The lowest number of crimes per 1,000 people of the local population was registered in Kardzhali and Smolyan, where crime rates were three times lower than those in Burgas and Sofia (capital city) – the districts with the highest crime numbers. The interdependence between stronger economic development and a higher number of recorded crimes is still valid – understandably so, in view of the more intensive social and economic life in districts such as the capital, Varna and Burgas, which have also the greatest concentration of population. Besides, these are the three districts with the lowest share of solved crimes in 2015, with hardly over 1/3 of crimes solved. As could be expected, the clearance crime rate is highest in districts with relatively low crime rates, such as Razgrad and Silistra, with over 60% solved crimes.
Figure 7: Reported crimes against the person and property per 1,000 of the average annual population in 2015
Source: Ministry of Interior
In 2014 and 2015 no particular change was noted with regard to indicators describing the work of criminal departments in district courts. The chief factor influencing speed of court procedures in different districts was the workloads of criminal judges. It was highest in the capital where the most visible downward trend in their workloads could be observed. Still, pending cases reached 15.4% compared to the country average of 9.4%, whereas the share of criminal cases cleared within 3 months was only 76.0% vs. the national average of 88.1%. The district courts of Blagoevgrad, Veliko Tarnovo, Kardzhali and Montana can also be said to have a relatively low efficiency. These four districts have workloads lower than the national average, but their percentage of pending cases was higher than the average. The opposite (high workloads with a relatively low share of pending cases) can be found in the districts of Burgas, Pazardzhik, Plovdiv, Sliven, Stara Zagora, and Haskovo.
Following two successive years in which the levels of carbon dioxide emissions to the atmosphere had dropped, they went up again in 2014 to reach 314,5 t/sq. km. These emissions rose in 10 and fell in 12 districts in Bulgaria, the greatest increase being observed in Stara Zagora and Varna, while the greatest drop occurred in Haskovo.
In recent years no significant change has been noted in the share of population living in towns and villages with access to sewerage systems (a rise from 74% in 2011 to 75% in 2014). Similar is the situation with the access to wastewater treatment plants (WWTP) of the population who have access to water supply and sewerage connection. It reached 57% in 2014, once again a rise of 1 percentage point compared with 2011. A possible explanation for the insignificant change in these indicators is that by 2014 most water cycle projects had not been finished yet, while some had failed or had been temporarily suspended. An example in point is the construction of a WWTP in Vidin, which was terminated because of suspected EU fund misuse. Thus in 2016 Vidin remains the only district in the country without an operating WWTP.
Cultural activities during the last year could be evaluated in positive terms as a whole. The numbers of visits to libraries and museums have continued to increase. Libraries enjoy the highest interest in the districts of Veliko Tarnovo and Sofia (capital city), so do museums in Veliko Tarnovo and Gabrovo. Despite the considerably increased interest in cinemas in recent years, there are still five districts in Bulgaria without a single cinema house. These are Kardzhali, Lovech, Montana, Pazardzhik, and Pernik. The districts where cinema houses were opened in 2014 (Vidin, Razgrad, Smolyan, and Shumen) have reported a growing number of admissions so far (relative to local population numbers), an indicator of growing consumer demand.
Figure 8: Registered visits to cinemas and theatres per 1,000 of the average annual population in 2015
Only theatre visit numbers have declined: from 2.30 m in 2014 to 2.17 m in 2015, the greatest part of it having been registered in Sofia (capital city). Thus Ruse has displaced Sofia as the district with the highest ratio between registered theatre visits and the number of the local population. Despite the decreasing numbers in 2015, the long-term tendency is for a rising number of theatre visits: between 2009 and 2015 total visits grew by 35%.